Bakers prefer butter, helping prices soar
Consumers around the world are willing to pay more for products containing dairy and this is driving demand for butter and cream, says Fonterra.
In its World Dairy Situation report released last week, the IDF says weather is playing a crucial role and 2013 seems to be a "reverse portrait of 2012, with a sluggish start and a dynamic finish."
"First in 2012, adverse weather conditions were concentrated mostly in the second half-year, while conditions were rather favourable during the first six months," it says.
"Unlike 2012, the first half of 2013 was not a bonanza time."
Many countries in Europe were still recovering from adverse weather conditions and this affected the forage quality given to cows. The animals were also released to pasture a month later than usual in most European countries.
The report says a severe drought in New Zealand earlier this year resulted in "massive culling and a severe milk production decline" compared to the first half of last year.
While the report stops short of predicting the weather for the remainder of this year, it says the July to September period appears to be more favourable than 2012.
"No severe drought has occurred in the US and Russia; and weather patterns seems to be returning to normal in Europe, South America and New Zealand."
Cow's milk still represents 83% of the total world milk production. The 2012 milk yield grew 2.1% compared to 2.7% the year before. India, the world's biggest milk producer, and Pakistan helped Asia lead the way with a 4.4% increase in production. Oceania was a mixed bag; New Zealand's production rising 8.5% and Australia's declining 3%.
The report was prepared by IDF's standing committee on dairy policies and economics, chaired by Sarah Paterson (pictured), Fonterra. In their foreword, Paterson and IDF director general Nico van Belzen say market volatility remains a constant for the global dairy industry.
"Weather remains a key driver of variability in milk supply," the say.
The long term prospects for dairy products are encouraging and driven by demand out of Asia, Middle East and Latin America. But they warn that while dairy commodity prices have recovered, farmers are under pressure in many regions due to rising input costs.
*Sudesh Kissun attended the 2013 World Dairy Summit in Yokohama, Japan with the assistance of the Asia New Zealand Foundation.
